“When companies using tax havens get government contracts or are allowed buy up privatized infrastructure, governments are effectively condoning tax havens” — Larry Brown, NUPGE President
Ottawa (12 Dec. 2017) — The way the Canada Infrastructure Bank has been set up means that investor profits will come ahead of meeting our country’s infrastructure needs. What should worry Canadians even more is that one of the biggest boosters of the Canada Infrastructure Bank is involved in tax havens.
“When companies using tax havens get government contracts or are allowed to buy up privatized infrastructure, governments are effectively condoning tax havens,” said Larry Brown, President of the National Union of Public and General Employees (NUPGE). “That flies in the face what Canadians believe and where the federal government claims to stand on tax havens.”
Blackrock officials played key role in decisions about Infrastructure Bank
Among the enthusiastic promoters of the Canada Infrastructure Bank have been senior officials from BlackRock, a US-based asset management firm overseeing over US$5.1 trillion in investments.
As reported by the Globe and Mail, BlackRock officials played a key role in helping develop plans for the Infrastructure Bank. Mark Wiseman, its Global Head of Active Equities, sat on the Minister of Finance’s Advisory Council on Economic Growth, which made the recommendation on how the bank would operate. BlackRocks involvement came as the federal government changed the plans for the infrastructure bank from a low cost source of infrastructure funding to a vehicle for enabling private investors to take control of public infrastructure.
BlackRock subsidiaries in notorious tax havens
BlackRock’s 2017 annual report lists subsidiaries in many of the world’s most notorious tax havens. These include 8 subsidiaries in Jersey – a small island of 100,000 people in the English Channel. To put that in perspective, BlackRock’s annual report lists more subsidiaries in Jersey than it does in Canada, France and Germany combined.
“There could possibly be legitimate reasons for corporations and individuals to have subsidiaries in tax havens,” said Brown. “However, when company has more subsidiaries in a place with 100,000 people than in 3 countries with a combined population of over 150 million people, people are right to ask questions.”
Almost half of the subsidiaries listed in its annual report are in Delaware, which according to the New York Times is seen as a tax haven, even though it is part of the United States.
Paradise Papers and BlackRock
The subsidiaries BlackRock mentions in its annual report may just be the tip of the ice berg. As the database of the International Consortium of Investigative Journalists (ICIJ) shows, the Paradise Papers (leaked information from a Bermuda law firm) include nine companies in tax havens connected to BlackRock Group.
This is information from just one law firm in just one tax haven.
Tax havens contribute to income inequality
Tax havens are one reason that income inequality is increasing.
Those benefitting from tax havens are the wealthy and large corporations. They use tax havens to avoid paying their fair share in taxes where they live or where they operate. That leaves low and middle income earners having to either pay more in taxes or do without public services they depend on.
Publicly funding infrastructure ensures Canadians get value for money
There is an easy way for the federal government to make sure money that should be spent on infrastructure doesn’t go to tax havens. That’s to fund infrastructure through taxes or government borrowing. It will mean governments will no longer be able to use P3 privatization schemes to hide how much is being spent. But for the public it will be cheaper and give us more control over the services we rely on and pay for.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 370,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. — NUPGE